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TMI Tax Updates - e-Newsletter October 30, 2019 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise Highlights / Catch Notes GST Time of supply - continuous supply of services - renting of immovable properties - If the rent invoice is issued before the due date of payment, the Time of supply is determined by Section 13(2) (a), as the earliest of the date of issue of invoice by the supplier and the date of receipt of payment. If payment is not received for any reason, including legal disputes, the time of supply shall be date of issue of invoice. Visit to Get Source Input Tax Credit (ITC) - HealthCare Services - the applicant is not eligible for the credit of tax paid on the Input services used exclusively for providing exempt services of health services to in patients such as laundry services used for inpatient. Visit to Get Source Exemption form GST - Healthcare services - medicines, consumables and implants used in the course of providing health care services to in-patients - The applicant is a Clinical Establishment and for the health care services as defined in the Notification above is provided including the supply of medicines, implants and consumables, they are exempt. Visit to Get Source Search and Seizure - Sub-section (2) of section 67 does not empower the officer concerned to record statements of family members through force or coercion or to record their conversations in their mobile phones - a proper inquiry needs to be made in respect of the action of the respondent officers of staying day and night at the premises of the petitioner without any authority of law. Visit to Get Source No Tribunal under Section 109 of the CGST Act is constituted/ functioning. Thus, the Petitioner is remediless. - Respondents are restrained from adopting any coercive steps consequent to the impugned order dated 25th March, 2019. Visit to Get Source Income Tax Revision u/s 263 - CIT was of the view that apparently the registration expenditure was paid on undisclosed income and was liable to be taxed which has not been done by the assessee. - The facts of the present case would fall where the A.O. did not conduct any enquiry or examined the evidence whatsoever related to the issue under consideration. There was total absence of enquiry or verification. Visit to Get Source Revision u/s 263 - The failure to compute assessee’s income u/s 115JB, in our considered opinion, would certainly make the order liable for exercise of revisional jurisdiction u/s 263. There was a certain omission on the part of Ld. AO in not considering the computation of Book Profits u/s 115JB and therefore, the jurisdiction u/s 263 was rightly invoked. Visit to Get Source PCIT has rightly invoked extraordinary revisionary powers as are enshrined in Section 263 as no inquiry, verifications and ivestiigations were made by the AO before allowing deduction of interest expenditure payments to HUF. It is not brought on record by the AO whether Karta is partner in his individual capacity albeit representing HUF or instead HUF is partner in the assessee firm directly Visit to Get Source Taxation of Association of person (AOP) u/s 167B - one of the member of AOP is an Non Resident i.e. HPI, a company registered in Canada and the income of this member is taxable at 42.23%. In order to determine the applicability of Section 167B(1) of the Act, it is essential to decide whether the shares of the members of the AOP are indeterminate or unknown. Visit to Get Source Expenditure on relocation of existing equipment - The relocation of the existing equipment by any stretch of imagination cannot result in creation of any new asset. At best it could have resulted in efficient running of the plant and machinery. - allowed as revenue expenditure. Visit to Get Source Income accrued in India - DTAA between India and Spain - while the expression ‘principally’ is not specifically defined in the Indo Spanish tax treaty, as evident from the subsequent clarifications in the model convention commentaries, and in the absence of anything to suggest there was a different intention at an earlier point of time, the threshold test can be safely applied at “fifty percent” of total assets. Visit to Get Source Addition u/s 40A(2)(b) - related party transactions - services rendered towards transportation and handling of cargo - it would be reasonable to restrict the addition to 10% from 15% made by the ld. CIT(A). Visit to Get Source the transaction of the loan was carried out through the banking channel. Therefore there cannot be any doubt about the genuineness of the transactions. Addition u/s 68 - The assessee in the present case has duly explained the source of money received in their hands. The assessee is not answerable to justify the source of the source of the money received by him. Visit to Get Source Customs Rejection of refund - Non-filing of the original document is not a valid ground for rejection of the refund because the appellant has given justification for non-filing the original document and has also submitted that it is not required under law to file the original document. Visit to Get Source EPCG scheme - import of machinery - undeclared ‘spares’ - The appellant is entitled to adjustment of ‘duty saved’ to the extent of the amount in the ‘transfer release advice’ and the recovery of duty, if any, is to be restricted to any excess due thereafter - Thus, only the undeclared goods valued are liable to confiscation u/s 111. Visit to Get Source Service Tax Rebate claim - unjust enrichment - user of renting services for export of goods - These goods are ultimately taken outside India by those passengers. In this way the passengers can be termed as carrier only and not the exporter of those goods. The exporter is the respondent. Therefore the issue of unjust enrichment will not arise here. Visit to Get Source CENVAT credit - input services - intermediary services - Demand has been raised on the basis of original returns. In fact, the appellant has filed revised returns, in that circumstances, the original return filed by the assessee are null & void, the same cannot be considered any legal documents. Visit to Get Source Extended period in the present case cannot be invoked because the law on the point was not clear and the definition of exempted service was changed from time to time and the interpretational issue was involved Visit to Get Source Refund of service tax remaining unutilized - Rule 5 - Export of services - the denial of the refund only on the basis of non-disclosure of the cenvat credit in ST-3 return is not legally sustainable and therefore, the rejection of refund on this ground is set aside. Visit to Get Source Refund of CENVAT Credit - input services - Rule 5 - The refund claim cannot be denied merely on the premise that services in question on which Cenvat credit remained unutilized in Cenvat credit are not Input Services Visit to Get Source Articles TAXABILITY OF VARIOUS IMAGING PRODUCTS IS MIXED SUPPLY WAREHOUSE DEVELOPMENT AND REGULATORY AUTHORITY Case Laws: GST 2019 (10) TMI 1188 Time of supply - continuous supply of services - renting of immovable properties - HELD THAT:- It is seen from lease agreements with State Bank of India for 01.04.2015 to 31.03.2020, R R Stones Private Limited for the period 05.03.2016 to 04.03.2021, Raj Petro Specialties Private Limited for the period 04.11.2015 to 03.11,2020 and Total Care Services Private Limited for a period of 10 years that the lease fee is to be paid monthly or with an upfront payment and rent to be paid annually. It is seen that there is a requirement of the lessee to pay lease rent or license fee periodically while they occupy the immovable property. During the currency of the lease agreement, the applicant issues an invoice periodically as required in the respective lease agreement. In respect of continuous supply of service when the license is in effect , as per Section 31(5), the tax invoice, containing the details as per Rule 46 of CGST/TNGST Rules ,should be raised on or before due date of payment as ascertainable from the contract. It is seen in the sample contracts provided that in certain cases, the due date of payment is periodical, either monthly or annually, with the due dates specified after the end of such period. If the rent invoice is issued before the due date of payment, the Time of supply is determined by Section 13(2) (a), as the earliest of the date of issue of invoice by the supplier and the date of receipt of payment. If payment is not received for any reason, including legal disputes, the time of supply shall be date of issue of invoice. If the invoice is issued after such due date of payment, the Time of supply is determined by Section 13(2) (b), as the earliest of the date of provision of service which is the end of the period (monthly/annual etc.) specified in the contract and the date of receipt of payment, whichever is earlier. If payment is not received for any reason, including legal disputes, the time of supply shall be the date of provision of service which is the end of recurrent period specified in the agreement after which the rent/license fee is to be paid. The time of supply in cases where instead of receiving the full consideration, they only get a partial amount as payment - HELD THAT:- In these case too the above will apply as the date of payment of full consideration is the date of reckoning of the date of payment. 2019 (10) TMI 1187 Levy of GST - HealthCare Services - medicines, consumables, surgical and implants used in the course of providing health care services to patients admitted to the Hospital for diagnosis or treatment would be considered as Composite Supply of health care services under GST - exemption under N/N. 12/2017 read with section 8 (a) of GST - ITC eligibility for obligatory services provided to in-patients through outsourcing - Circular No 32/06/2018-GST dl 12.02.2018. HELD THAT:- Inpatient services means services provided by hospitals to inpatients under the direction of medical doctors aimed at curing, restoring and/or maintaining the health of a patient and the service comprises of medical, pharmaceutical and paramedical services, rehabilitation services, nursing services and laboratory and technical services. A complete gamut of activities required for well-being of a patient and provided by a hospital under the direction of medical doctors is a composite supply of service and is covered under Inpatient services classifiable under SAC 999311. Health care services provided by a clinical establishment or an authorized medical practitioner or para medics are exempted vide SI No 74 of Notification no 12/2017-C.T.(rate) dated 28.06.2017 as amended and SI No 74 of Notification No.II(2)/CTR/532(d-15)/2017 vide G.O. (Ms) No. 73 dated 29.06.2017. From a joint reading of the Explanation of service pertaining to Inpatient services and the exemption above, it is evident that the exemption is applicable to a Clinical Establishment , when services by way of diagnosis or treatment or care for illness, etc. are undertaken by such establishment under the directions of a medical doctor. The applicant is a Clinical Establishment and for the health care services as defined in the Notification above is provided including the supply of medicines, implants and consumables, they are exempt under SI No 74 of Notification no 12/2017-C.T. (rate) dated 28.06.2017 as amended and SI No 74 of Notification No.II (2)/CTR/532(d-15)/2017 vide G.O. (Ms) No. 73 dated 29.06.2017. Eligibility of Input Tax credit of GST paid by the applicant on the inward services received by them - HELD THAT:- On perusal of the various bills, copies of which is furnished by the applicant, it is seen that except for supply of medicines by the out-patient pharmacy, no other bills has GST component in the bill, i.e, GST is not charged in any of the output supplies made by the applicant other than supply of medicines to out-patients from out-patient pharmacy. The taxable output supply made by the applicant is the supply of medicine from the out-patient pharmacy. The eligibility of credit of tax paid on the Input services used for providing taxable and exempt supplies stands governed under Section 17(2) of the CGST/TNGST Act 2017 read with Rule 42 of the CGST Rules 2017 as amended. Thus, the applicant is not eligible for the credit of tax paid on the Input services used exclusively for providing exempt services of health services to in patients such as laundry services used for inpatient. In respect of input services such as housekeeping, leasing of equipment used for both exempt supply of health services to in patients and taxable supply of medicines etc. to outpatients , the appropriate ITC eligible is determined by the above Rule 42 of the CGST Rules 2017 and TNSGST Rules as amended. 2019 (10) TMI 1186 Classification of goods - Carbonated Fruit Juice - whether falls under Fruit Juices or Aerated drinks? - HELD THAT:- A s per the classification of FSSAI, Fruit juices are unfermented but fermentable product obtained by a mechanical process from sound, ripe fruit or the flesh thereof and processed by heat, in an appropriate manner, before or after being sealed in a container, so as to prevent spoilage and are intended for direct consumption. In the instant case, the product is made by adding fruit juices to large quantities of water along with other preservatives which then goes through a carbonation process. The juices are not meant for direct consumption here but are just one ingredient of the drinks - the fruit juices and carbonated beverages with fruit drinks are distinct products in the FSSAI regulations and the products of the applicant axe covered under Para 2.3.30 of the regulations and Category 14.1.4.1 in the food category system in Appendix A to these regulations. The fruit juices are extracted from fresh, healthy and ripe fruits through various processes followed by filtration to remove solids, aeration, homogenization and sterlisation. Such fruit juices to be classified under CTH 2009 can have added sugar, standardizing agent, preservatives as long as they retain their original character. However, addition of water to normal fruit juice or to a concentrated juice of a greater quantity of water than is necessary to reconstitute the original fruit juice results in diluted products excludes such products from CTH 2009 and are to be classified as beverages of heading 2202 - In the instant case, water constitutes around 92% in all the products in question. The product is prepared by adding fruit juice, procured by the applicant (as per the input invoices submitted), to filter water. It is evident that this large quantity of water results in diluted products which as per the Explanatory Notes above get classified under CTH 2202. Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured, and Other Non-alcoholic beverages, not including fruit or vegetable juices of Heading 2009’ are covered under CTH 2202. Further, The Explanatory Notes classifies Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured’ under CTH 220210 - In the case at hand, the manufacturing process of the products involves addition of fruit juice (Lime/ Orange), sugar, ingredients, flavours to filtered water in a blending tank, which is chilled at 5°C in the Chilling Tank and then passed through Juice& CO2 Mixing Unit after which the same is bottled for supply in various quantities such as 200 ml, 300 ml, 600 ml, 1500 ml, etc. and are sold as ‘Carbonated Beverage with fruit juice’. These beverages fall squarely under the category mentioned in the Para (A) (2) of the Explanatory Notes above. That is they are classifiable under CTH 220210. The products to be supplied by the applicant are to be classified as ‘Richyaa Darner Lemon’ and ‘Licta Lemon’ are classifiable under CTH 22021020 and all others i.e. ‘Richyaa Darner Cola’, ‘Licta Cola’, ‘Richyaa Darner Jeera Soda’, ‘Licta Jeera Masala, ‘Richyaa Darner Orange’ and ‘Licta Orange’ are classifiable as ‘Other’ under CTH 22021090. 2019 (10) TMI 1185 Exemption form GST - Healthcare services - Composite supply or not - Whether the medicines, consumables and implants used in the course of providing health care services to in-patients for diagnosis or treatment would be considered as Composite Supply and accordingly eligible for exemption under the category HealthCare Services ? HELD THAT:- Inpatient services means services provided by hospitals to inpatients under the direction of medical doctors aimed at curing, restoring and/or maintaining the health of a patient and the service comprises of medical, pharmaceutical and paramedical services, rehabilitation services, nursing services and laboratory and technical services. A complete gamut of activities required for well-being of a patient and provided by a hospital under the direction of medical doctors is a composite supply of service and is covered under Inpatient services classifiable under SAC 999311 - Health care services provided by a clinical establishment or an authorized medical practitioner or para medics are exempted vide SI No 74 of Notification no 12/2017-C.T.(rate) dated 28.06.2017 as amended and SI No 74 of Notification No.II(2)/CTR/532(d-15)/2017 vide G.O. (Ms) No. 73 dated 29.06.2017. From a joint reading of the Explanation of service pertaining to Inpatient services and the exemption above, it is evident that the exemption is applicable to a Clinical Establishment , when services by way of diagnosis or treatment or care for illness, etc. are undertaken by such establishment under the directions of a medical doctor - The applicant is a Clinical Establishment and for the health care services as defined in the Notification above is provided including the supply of medicines, implants and consumables, they are exempt under SI No 74 of Notification no 12/2017-C.T. (rate) dated 28.06.2017 as amended and SI No 74 of Notification No.II (2)/CTR/532(d-15)/2017 vide G.O. (Ms) No. 73 dated 29.06.2017. 2019 (10) TMI 1184 Search and Seizure - the officers had stayed at the premises and had examined the phone calls that were received by the family members and had recorded their phone calls. - sub-section (2) of section 67 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- Sub-section (2) of section 67 of the CGST Act empowers the authorised officer to search and seize goods, documents or books or things. Sub-section (4) of section 67 empowers the officer authorised under sub-section (2) to seal or break open door of any premises or to break open any almirah, electronic devices, box, receptacle in which any goods, accounts, registers or documents of the person are suspected to be concealed, where access to such premises, almirah, electronic devices, box or receptacle is denied. Thus, the officers concerned were authorised to seize such books, goods, documents, or things which were found at the premises. Sub-section (2) of section 67 does not empower the officer concerned to record statements of family members through force or coercion or to record their conversations in their mobile phones. The manner in which the officers have conducted themselves by overreaching the process of law and acting beyond the powers vested in them under sub-section (2) of section 67 of the CGST Act needs to be deprecated in the strictest terms. Therefore, a proper inquiry needs to be made in respect of the action of the respondent officers of staying day and night at the premises of the petitioner without any authority of law. The first respondent Commissioner of State Tax, Ahmedabad shall carry out a proper inquiry in the matter and submit a report before this court on or before 13th November, 2019 - Stand over to 13th November, 2019. 2019 (10) TMI 1183 Extension of time for conducting inspection of the goods and conveyance - HELD THAT:- Issue Rule, returnable on 14th November, 2019 . By way of interim relief, the respondent is directed to forthwith release the conveyance together with the goods contained therein, which shall be subject to the final outcome of the petition. 2019 (10) TMI 1182 Release of seized goods - Section 129(b) of the Central GST Act, 2017 read with Rule 140 of the Central GST Rules, 2017 - HELD THAT:- If the petitioners pay due amount under the impugned order by way of tax and penalty in terms of Section 129(b) of the Central GST Act, 2017 read with Rule 140 of the Central GST Rules, 2017 the goods seized shall be released by the Proper Officer without prejudice to the rights of the petitioner herein. List/ put up on 12.12.2019. 2019 (10) TMI 1181 Assessment Order - Section 62 of the CGST Act, 2017 - contention is that, the impugned orders were passed in a quite mechanical manner, without proper application of mind - Principles of natural justice - HELD THAT:- The assesses herein had committed default continuously in filing the returns, in responding to the notices requiring them to file the returns, in responding to the notice proposing best judgment assessments etc. Even after receipt of the impugned orders of assessment, they failed to avail the remedy provided under subsection (2) of Section 62. Under such circumstances we cannot entertain the challenges raised against the best judgment assessments finalized. Against the impugned orders the appellants have got an effective remedy by way of statutory appeal. There exists no circumstances to quash the impugned orders in exercise of the jurisdiction vested under Article 226 of the Constitution of India, by permitting the appellants to bypass such effective remedy available - Appeal dismissed. 2019 (10) TMI 1180 Revocation of cancellation order - registration of the petitioner under the GST regime was cancelled - HELD THAT:- The present writ petition has become infructuous as the Competent Authority has since passed order dated 11.10.2019, whereby the application for revocation has been rejected - Appeal disposed of as infructuous. 2019 (10) TMI 1179 Maintainability of petition - alternative remedy of appeal or not - Tribunal has not yet been constituted and/or is not functional - HELD THAT:- he preamble to the impugned order dated 25 th March, 2019 itself provides that an appeal against it would lie under Section 112(1) of the CGST Act, 2017 to the Tribunal, constituted under Section 109 of the CGST Act, 2017. It is an agreed position between the parties that no Tribunal under Section 109 of the CGST Act is constituted/ functioning. Thus, the Petitioner is remediless. The Petitioner s fear is that the Revenue may adopt coercive proceedings to recover its dues under the impugned order dated 25th March, 2019. We adjourn this Petition by a period of three months. This in the hope that in the meantime, the Tribunal under Section 109 of the CGST Act, 2017 would be constituted/ be functional to enable the person aggrieved by orders passed by the Appellate Authorities under the CGST Act to file appeals. Respondents are restrained from adopting any coercive steps consequent to the impugned order dated 25th March, 2019. Income Tax 2019 (10) TMI 1178 Judgment passed exparte - Application filed for Recall of the Judgment on the ground that the Applicant-Company was not served with the Notice of the SLP at the registered office of the Company, nor was a copy of the SLP served on the Applicant - Company - HELD THAT:- The ground taken by Mr. Sanjeev Narayan that even though Notice was served on 13.12.2018, he assumed that they were some Income Tax Return Documents lacks credibility. It is difficult to accept that the envelope containing the dasti Notice from this Court was considered to be some Income Tax Return documents . The deponent does not at all disclose as to when the envelope containing the dasti Notice was ever opened. The ground urged that the Chartered Accountant was suffering from an advanced stage of cataract, and hence was constrained from informing his clients is again not worthy of credence. The dasti Notice was admittedly served on him on 13.12.2018 at his office, which was much prior to his surgery which he states took place on 04.01.2019. Mr. Narayan had sufficient time to inform the Applicant Company of the proceedings, prior to his surgery. Furthermore, Mr. Narayan appeared before the Income Tax Authorities to represent the Applicant Company and its sister concerns on various dates prior to his surgery i.e. on 14.12.2018, 21.12.2018, 28.12.2018 and 29.12.2018. This Court is satisfied that the Applicant Company was duly served through their authorized representative, and were provided sufficient opportunities to appear before this Court, and contest the matter. The Applicant Company chose to let the matter proceed ex-parte. The grounds for Recall of the Judgment are devoid of any merit whatsoever. Applicant Company having failed to make out any credible or cogent ground for Recall of the judgment 2019 (10) TMI 1177 Revision u/s 263 - estimation of profits - HELD THAT:- AO was swayed by the action of his predecessor in the earlier year which he had made an adhoc addition, however, the AO failed to take into consideration the declared G.P in the past year (11.68%) which is substantially higher as compared to current year (5.95%). Where there is a substantial increase in the turnover (₹ 61.21 Crores) as compared to the past year (₹ 6.08 Crores), the same is a material change which has happened during the year and it was incumbent on part of the AO to examine and consider the impact thereof while carrying out the best judgment. AO was not aware of the said development and in fact, the assessee in its submission during the course of assessment proceedings has submitted the said fact before the AO. Besides that during the year, the assessee was also engaged in sub-contract work which was awarded by a Joint Venture by name of HGIEPL-RPS JV of which the assessee is one of the members. The fact of increase in turnover and the fact of involvement in a sub-contract during the year, which may have different profits margins depending upon nature of work and other parameters, and that too, with a related entity, is clearly a material development and distinction vis- -vis the past year and the same should have been examined and considered while estimating the profits by the AO. AO has failed to take the same into consideration and therefore, the basis of estimation merely relying on the past history cannot be accepted as rational having failed to establish reasonable nexus with the material on record. Violation of provisions of section 40A(3) - Pr. CIT has rightly highlighted this fact which the Assessing has failed to examine during the course of assessment proceedings and the same should be considered as a relevant factor while estimating the profits by the Assessing officer. It is a clear case of failure on part of the AO to examine the matter ignoring the material available on record and thus, a matter of complete lack of application of mind. We therefore donot see any infirmity in the action of the Pr. CIT who has rightly intervened and exercised his revisionary jurisdiction u/s 263 of the Act. Increase in the partner s capital account - Pr. CIT has observed that no documentary evidence is available on record and apparently the said matter has not been examined by the Assessing Officer. Undisputedly, the matter relating to increase in the partners capital account has not been examined by the Assessing Officer. Therefore, when the matter has not been examined at first place by the Assessing Officer, it would be difficult to hold that the order of the AO is not erroneous and as far as whether the order is prejudicial to the interest of the Revenue or not, the same is subject matter of examination and had the matter been examined by the Assessing officer, it can be determined whether the joint venture has been finally assessed at MMR at claimed by the assessee and whether the shares of the members are determinate or not. Therefore, in absence of examination by the Assessing officer, it is difficult to hold that the issue raised by the ld Pr CIT has not caused any prejudice to the Revenue and therefore, we upheld the order of the ld Pr. CIT and do not see any infirmity in the action of the ld. Pr. CIT in directing AO to examine the same during set aside proceedings. Capital infusion by the assessee firm in the joint venture - as been shown as loan and advance in the books of the assessee firm and the fact that the assessee has incurred huge interest expenses on the secured loans and on the partners of the capital account. The assessee has not disputed these facts and we find that the same has not been examined by the Assessing officer. The contention of the ld. AR regarding the business expediency of contributing the capital to the joint venture is again a matter of examination and given that the said matter has not been examined by the Assessing Officer, we do not see any infirmity in the action of the ld. Pr. CIT in exercising his revisionary jurisdiction. Examination of source of cash deposited in the bank account of Sh. Rameshwar Prasad Sharma (HUF) from whom the assessee has received unsecured loan of ₹ 10,00,000/-, given that Rameshwar Prasad Sharma (HUF) is a related entity , the onus of the assessee is clearly on higher pedestal to justify the creditworthiness and genuineness of the transaction especially in light of the observations of the ld. Pr. CIT that the cash was deposited in the bank account of Rameshwar Prasad Sharma (HUF) just before unsecured loan was given to the assessee firm. Given that the Assessing Officer has not examined the said transaction, there is no infirmity in the action of the ld. Pr. CIT in directing the Assessing Officer to do so in the set aside proceedings. Reflection of individual partner s bank accounts in the balance sheet of the assessee firm , apparently given that these are partner s personal bank accounts and not the bank accounts maintained by the partners on behalf of the assessee firm, we find it strange as to how the personal bank accounts have been reflected as part of the balance sheet of the assessee firm which is legally distinct entity viz a viz the partners as far as taxation laws is concerned. CIT was right in directing the Assessing Officer to examine these transactions in the partner s personal bank accounts and linkage thereof with the transactions of the assessee firm. It is a clear case where the order passed by the Assessing officer is erroneous and prejudicial to the interest of the Revenue. We therefore, do not see any infirmity in action of the ld. Pr. CIT who has rightly intervened and exercised his revisionary jurisdiction u/s 263 of the Act. Appeal of the assessee is dismissed. 2019 (10) TMI 1176 Levy of penalty u/s 271(1)(c) - Non specification of charge - HELD THAT:- Penalty proceedings have been initiated during the course of assessment proceedings and the show cause notice issued by the Assessing Officer u/s 274 read with 271(1)(c). Show-cause notice dated 31.12.2010 has initiated the penalty proceedings for concealed the particulars of income or furnished inaccurate particulars of such income and subsequently, while passing the penalty order, the AO has levied penalty for furnishing inaccurate particulars of income. We therefore find that though the AO has not initiated the penalty on a specific charge, however, while levying the penalty, the Assessing officer has levied the penalty for furnishing of inaccurate particulars of income. At the same time, it is also noted on perusal of the penalty order that the finding so given is not specific to three separate disallowances and the AO has merely gone by the order of the Tribunal in the quantum proceedings where additions have been sustained and has not given any specific finding as to how the disallowances so made and sustained results in furnishing of inaccurate particulars of income. In case of Shweta construction [ 2016 (12) TMI 1603 - RAJASTHAN HIGH COURT] has held that the Assessing officer has to give a specific notice while initiating the penalty proceedings itself. In the instant case, the show-cause notice is not specific as to the charge for levy of penalty which shows non-application of mind by the Assessing officer and hence, respectfully following the decision of the Hon ble Rajasthan High Court, the consequent penalty order cannot be sustained. In the result, the penalty so levied by the Assessing officer is directed to be deleted. - Decided in favour of assessee. 2019 (10) TMI 1175 Penalty u/s. 271AAB - additions were made to the total income of the assessee in the order passed u/s. 153C - HELD THAT:- As decided in Shreeji Corporation [ 2018 (11) TMI 475 - ITAT AHMEDABAD ] Applicability of Section 271AAB is integrally connected to search under s.132 of the Act. In the absence of search under s. 132 of the Act, the assessee has no occasion to avail the concessional treatment by way of admission under s.132(4) of the Act. Thus, we find obvious merits in the observations made by the first appellate authority that provisions of Section 271AAB are not applicable to the case of the assessee. In the absence of search u/s 132 of the Act, the consequential or incidental assessment proceedings under s.153C of the Act will not, in our view, entitle the AO to usurp jurisdiction u/s 271AAB of the Act for the purposes of imposition of penalty. Penalty in the case of assessee cannot be sustained as the assessee was not a person who was subjected to search u/s. 132 of the Act and consequently the provisions of section 271AAB could not be invoked in his case. - Decided in favour of assessee. 2019 (10) TMI 1174 Additions towards sundry creditors - assessee could not explain creditors with necessary evidence to the satisfaction of the AO nor prove genuineness of transactions - According to the AO, notices issued to few parties were returned unserved - HELD THAT:- It is not a case of the AO that the assessee did not file any documents in respect of creditors to prove identity and genuineness of transactions. In fact, the CIT(A) has recorded categorical finding that the assessee has filed various details including PAN and TIN numbers of the parties. CIT(A) has also recorded categorical finding that the assessee has filed proof of payment by cheque against creditors in subsequent financial years. Therefore, we are of the considered view that it is incorrect on the part of the learned AO as well as CIT(A) to come to the conclusion that the assessee has failed to prove identity of the creditors. Genuineness of transactions - The assessee claims that before lower authorities, it has filed various evidences including bills issued by the parties which contain PAN and TIN numbers of the suppliers. The assessee further claims that it has deducted TDS on payments made to those parties and filed necessary TDS certificates before the AO as well as the CIT(A). When payments have been made through proper banking channels and also necessary TDS has been deducted on such payments, it cannot be said that the transactions between the parties are not genuine. Further, when the assessee has filed various evidences including PAN and TIN numbers of the parties to prove identity and also filed evidences of payment by cheque in subsequent years, then there is no reason for the AO to doubt identity and genuineness of transactions merely for the reason of non filing confirmation letters from the parties. The assessee has explained the reasons for non-furnishing confirmation letters from few parties as per which those parties have closed their business before assessment proceedings was completed. In respect of other parties, even though it could not obtain confirmation letters, but filed all possible details including payment proof by cheque along with letters from the bankers confirming payment to the party account. AO as well as the learned CIT(A) had erred in coming to the conclusion that the assessee had failed to file necessary evidences to prove genuineness of creditors. In so far as M/s. Air State Logistics Couriers Pvt. Ltd.as per assessee s books of accounts, balance outstanding as on 31.03.2011 is at ₹ 8,56,641/-. Even going by the details filed by the assessee, there is huge difference in balance as per books of accounts of the assessee and balance confirmed by the party. The assessee claims that there are some reconciliation issues between balance shown in books of accounts of the assessee and balance confirmed by the party for which necessary reconciliation can be filed to explain difference. Therefore, the learned AR for the assessee requested to set aside the issue to the file of the AO for further verification in light of reconciliation filed by the assessee to explain difference in balance appeared in assessee books of accounts and balance confirmed by the party. But, the fact remains that the assessee has filed certain additional evidences in form of TDS certificates and payment through cheque in subsequent financial years against those creditors. We are not sure whether these documents were placed before the AO at the time of assessment proceedings or not. Therefore, we are of the considered view that the issued needs to go back to the file of the AO for further verification in light of various evidences filed by the assessee including payment proof by cheque in subsequent financial years. Isue needs to go back to the file of the AO for further verification in light of various evidences filed by the assessee including additional evidences filed in the form of TDS certificates and payment proof by cheque in subsequent years to those creditors. Hence, we set aside the issue to the file of the AO and direct him to reconsider the issue in accordance with law, after affording opportunity of being heard to the assessee. Decided in favour of assessee for statistical purposes. 2019 (10) TMI 1173 Penalty u/s 271AAB - cash accumulated in saving account - cash found from the locker of wife of the assessee - HELD THAT:- Cash was found from the locker of the wife of the assessee and this fact is also manifest from the statement of the assessee recorded U/s 132(4) of the Act. In reply to question No. 6, the assessee has stated that the cash found from the locker of the wife of the assessee is admitted his undisclosed income and surrendered for tax. The assessee has explained during the penalty proceedings that this cash of ₹ 8,53,500/- is accumulated savings for past years and therefore, the same is not an undisclosed income of the assessee. The very fact of source of cash from the locker of the wife demonstrate that the same belongs to the wife of the assessee and even as per the provisions of Section 132(4A) presumption can be raised regarding any money, bullion, jewellery or other valuable articles or things is found in the possession or control of any person in the course of search, the same belongs to such person. Cash was found from the locker of the wife of the assessee which means it was found from the possession and control of the wife and therefore, cannot be presumed to be belonging to the assessee. Accordingly, without considering the cash being an undisclosed income of the assessee as per definition provided in the explanation to Section 271AAB the levy of penalty in respect of such surrender made by the assessee is not sustainable. Hence, the same is deleted. Penalty is not automatic as a result of surrender made by the assessee but the A.O. has to first decide whether the surrender made by the assessee is falling in the definition of undisclosed income as provided in the explanation to Section 271AAB(1) - When the assessee has furnished explanation that the cash found from the locker of wife of the assessee is representing the past savings of the wife then in absence of giving a finding on the part of the A.O. that the cash actually belongs to the assessee and not to the wife, the levy of penalty U/s 271AAB of the Act is not sustainable and the same is deleted. Appeal of the assessee is allowed. 2019 (10) TMI 1172 Revision u/s 263 - addition under the head income from other sources as per provisions of section 56(2)(ii)(b) - Difference of market value of the property was adopted by stamp valuation authority as the assessee had declared sale consideration - HELD THAT:- As in the present case, CIT has categorically recorded a finding on fact that on perusal of purchase deed of the property in question, it was noticed that the market value of the property was adopted by stamp valuation authority for ₹ 1,80,53,000/-, whereas the assessee had declared sale consideration at ₹ 1,25,00,000/-. As such difference amount of ₹ 55,53,000/- (₹ 1,80,53,000 (minus) ₹ 1,25,00,000/-) was required to be added back in the total income of the assessee under the head income from other sources as per provisions of section 56(2)(ii)(b) of the Act. But this was not found done in the scrutiny by the A.O. As further observed that the assessee had claimed registration expenses out of saving and capital but the assessee has disclosed business income u/s 44AD of the Act and has not maintained books of accounts. On perusal of return of income pertaining to the assessment year 2014-15, there was no capital account found. Hence, the expenditure incurred on registration amount to ₹ 14,08,345/- remained unproved/unexplained. CIT was of the view that apparently the registration expenditure was paid on undisclosed income and was liable to be taxed which has not been done by the assessee. The facts of the present case would fall where the A.O. did not conduct any enquiry or examined the evidence whatsoever related to the issue under consideration. There was total absence of enquiry or verification. Therefore, we do not see any infirmity into the action of the Ld. CIT for setting aside the assessment order and remitting the assessment to the file of the A.O. with a direction to examine the issues of difference of market value of the property in question and verifying the source of expenditure incurred on registration of the property after affording proper opportunity to the assessee. Assessee has placed on record a valuation report that was not before the authorities below. We therefore, in the interest of justice admit this valuation report as additional evidence and modify the direction of the Ld. CIT to the extent that while framing the assessment, the A.O. would also consider the objection of the assessee regarding adoption of the market value of the property and decide the issue in accordance with law 2019 (10) TMI 1171 Revision u/s 263 - AO had made disallowance u/s 14A which should have been added back u/s 115JB, however, the same was not added back while computing Book Profits u/s 115JB - assessee claimed deduction of education-cess u/s 40 (a)(ii) which was nothing but additional surcharge and therefore, the same was erroneously allowed - assessee claimed deduction of provision for doubtful debt in the revised return of income which was erroneously allowed - assessee, in revised return of income, claimed excise duty exemption as capital receipts u/s 115JB which was erroneously allowed - assessee excluded amount representing retention money u/s 115JB which has erroneously been allowed by Ld. AO. HELD THAT:- A fresh notice u/s 142(1) was issued to the assessee during assessment proceedings on 27/01/2016 and the assessment was framed on 30/03/2016 i.e. within a short span of approx. 2 months. The assessee has placed on record its submissions dated 09/02/2016 to submit that requisite details as called for by AO were duly furnished by the assessee and the same were considered while framing the assessment and therefore, jurisdiction u/s 263 was bad in law. Upon perusal of submission dated 09/02/2016, we find that beside furnishing party-wise list of provision for doubtful debts along with ageing thereof, no other information / documents were supplied by the assessee with respect to any of the issues as pointed out by Ld. Pr.CIT. Upon perusal of impugned order, we find that Ld. Pr.CIT has invoked jurisdiction u/s 263 since, in his opinion, Ld. AO, inter-alia, failed to consider disallowance u/s 14A, Excise Duty Exemption, Retention money for the purpose of Section 115JB. Upon perusal of quantum assessment order, it is noted that Ld. AO has even failed to compute assessee s Book Profits u/s 115JB and no discussion, whatsoever, on the stated issues, emanates either from quantum assessment order or from the submissions made by the assessee during assessment proceedings. The failure to compute assessee s income u/s 115JB, in our considered opinion, would certainly make the order liable for exercise of revisional jurisdiction u/s 263. There was a certain omission on the part of Ld. AO in not considering the computation of Book Profits u/s 115JB and therefore, the jurisdiction u/s 263 was rightly invoked by Ld. Pr.CIT, which was the only remedy available with the revenue. Therefore, we are not inclined to interfere in the revisional jurisdiction us 263 as invoked by Ld. Pr.CIT on the stated issues. The twin conditions as envisaged by Sec. 263 were duly fulfilled, in the present case. For the same, we draw strength from legal principles laid down in judicial pronouncements as enumerated by us in the opening paragraphs as well as the provisions of Explanation-2 to Section 263. As noted that the quantum order has been set aside from framing of assessment afresh which, in our opinion, would not be correct approach in the present case since it would afford opportunity of review of issues which were already considered and adjudicated by Ld.AO during original assessment proceedings. Review of the order, unless permitted by law, is impermissible. Therefore, we modify the directions of Ld. Pr.CIT by directing Ld. AO to re-consider / re-adjudicate only those issues which triggered revisional jurisdiction u/s 263. These issues have already been framed by Ld. Pr.CIT in impugned order u/s 263. 2019 (10) TMI 1170 Revision u/s 263 - AO did not made any inquiry,verifications and investigation before allowing interest payments paid to HUF as business deductions - HELD THAT:- AO has not made any inquiry, verifications and investigation as to whether HUF is partner of the assessee firm or karta is partner of the assessee firm representing HUF. AO has allowed deduction of interest expenditure paid to M/s Ashok Kumar Fomra (HUF) as revenue expenses on advances appearing in books of accounts of the assessee having been received from said HUF, without going into aspect that HUF cannot be partner in partnership firm as per ratio of decision of Hon ble Supreme Court in the case of Rashik Lal Co [ 1997 (12) TMI 2 - SUPREME COURT] . It is not inquired, verified or investigated by the AO whether Mr Ashok Kumar Fomra is partner in assessee firm in his individual capacity albeit representing HUF or HUF is partner in assessee firm. This fact finding has to be recorded by the AO to adjudicate dispute between rival parties. PCIT has rightly invoked his revisionary powers under provisions of Sec.263 of the 1961 Act and rightly cancelled assessment order dated 24.11.2016 passed by the AO u/s 143(3) by holding the same to be erroneous so far as is prejudicial to the interest of Revenue as the AO did not made any inquiry,verifications and investigation before allowing interest payments paid to HUF as business deductions. PCIT has rightly invoked extraordinary revisionary powers as are enshrined in Section 263 as no inquiry, verifications and ivestiigations were made by the AO before allowing deduction of interest expenditure payments to HUF. It is not brought on record by the AO whether Karta is partner in his individual capacity albeit representing HUF or instead HUF is partner in the assessee firm directly - Decided against assessee. 2019 (10) TMI 1169 Penalty u/s. 271(1)(c) - non strike of inappropriate words - unexplained cash credit u/s.68 - HELD THAT:- Show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. The plea of the ld. Counsel for the assessee which is based on the decisions referred to in the earlier part of this order has to be accepted. We therefore hold that imposition of penalty in the present cases cannot be sustained and the same is directed to be cancelled. 2019 (10) TMI 1168 Addition on account of sale of alleged shortage in stock - GP rate application - HELD THAT:- AO worked out the difference of stock on estimate basis and did not point out any specific item which was sold outside of the books of accounts. CIT(A) also passed the impugned order in a slip shod manner, he simply stated that the A.O. worked out the difference during the course of assessment proceedings and applied the GP rate shown by the assessee. Explanation of the assessee wherein it was stated that the stock was lying in heaps in the ground and was taken in the round figures and even the rates of purchase were taken in round figures was not rebutted, therefore it appears that the calculation of the stock at the time of search was not accurate and particularly when the A.O. had not rejected the books of accounts then the addition made by the A.O. and sustained by the Ld. CIT(A) on estimate basis was not justified, accordingly the same is deleted. Disallowance of the salary paid - Excess salary debited by assessee - HELD THAT:- Assessee was having four employees namely Shri Kuldeep Kumar (Salesman), Shri Manish Sharma (Salesman), Shri Dalip (Peon) and Shri Sahil Goel and there was one Driver for Vehicle No. 3443, which is evident from the details furnished by the assessee before the A.O. and the Ld. CIT(A) i.e; copies of the ledger account which are placed at page no. 22 23 of the assessee s paper book. In our opinion the disallowance made by the A.O. and sustained by the CIT(A) on this basis that only two persons were stated to be employed in the statement during the course of search was not justified particularly when the assessee mentioned the names of the persons who were regularly employed, in its ledger account. In the present case, the books were accepted by the A.O., therefore, when the books of accounts were accepted which clearly show the name of the persons to whom monthly salary was paid total of which for the year under consideration was at ₹ 3,46,000/- then the disallowance made by the A.O. and sustained by the Ld. CIT(A) was not justified. Accordingly the same is deleted. 2019 (10) TMI 1167 Reopening of assessment u/s 147 - Taxation of Association of person (AOP) u/s 167B - whether the shares of members of AOP are determined or not? - HELD THAT:- The contention of the assessee that reassessment proceedings are prompted by mere change of opinion cannot be accepted for reasons that in the original assessment proceedings, there is nothing to show that Assessing Officer had examined the issue, whether the shares of members of AOP are determined or not. Therefore, it cannot be said that reassessment proceedings are promoted by mere change of opinion. Hence the ratio of the decision of Hon ble Supreme Court in the case of Kelvinator India Ltd (supra) cannot be applied to the facts of the present case. We do not find any merits in the contention challenging the validity of reassessment proceedings. In the result, grounds of appeal No.2 of the assessee stands dismissed. Applying provisions of Section 167B(1) of the Act while computing tax liability - Admittedly, in the present case, assessee was assessed in the status of AOP. The provisions of Section 167B of the Act provides that where the individual shares of the members of the AOP in the whole or any part of the income of the AOP or indeterminate or unknown, tax shall be charged on the total income of the association at the maximum marginal rate of tax. Proviso to Section 167B(1) of the Act further provides that where total income of any member of the AOP is chargeable to tax at the rate which is higher than the maximum marginal rate, tax shall be levied on the total income of the AOP at such higher rate applicable to such members. In the present case, one of the member of AOP is an Non Resident i.e. HPI, a company registered in Canada and the income of this member is taxable at 42.23%. In order to determine the applicability of Section 167B(1) of the Act, it is essential to decide whether the shares of the members of the AOP are indeterminate or unknown. Clause 2 of the profit sharing agreement further provides for the mode of payment 2% guaranteed profit. Having regard to the above clauses of the three agreements, it is clear that as cumulative consideration of the terms of the three agreements, the parties have not agreed as to the shares of the profits of the AOP. More importantly, Consortium Agreement entered into between the parties is totally silent as to the shares of the profits of the AOP. In terms of MOU in clause VII entered between parties on 30.11.2007, there is clear obligation on the part of CCCL to pay a sum equivalent to 2% of the project cost to HPL, which would go to show that it is not the AOP which is under obligation to pay 2% of contract price to HPL but it is CCCL. The term share of net profit implies a share in the net profits which is an interest in the profits as profits, and implies a participation in the profits and losses. In the present case, the member of the AOP i.e. HPL is entitled to 2% of the profit cost regardless of the fact whether AOP made profits or losses. This is only a charge against the profits of the assessee, AOP but not share in profits. Therefore, it cannot be said that the shares of the profit in AO of members is determinate or known. Thus on cumulative consideration of all clause the three agreement entered into it is crystal clear that shares members of AOP are indeterminate and unknown, therefore the provisions of sub section (1) to Section 167B of the Act are squarely applicable and we do not find any reason to interfere with the orders of the lower authorities. Thus, grounds of appeal No.3 raised by the assessee stands dismissed. 2019 (10) TMI 1166 Nature of land sold - agricultural land - unexplained investment u/s.69 - HELD THAT:- Land was an agricultural land as agricultural operations were duly carried on by assessee on the said land at the time of transfer/sale . It is already stated on oath by learned VAO based on government records as well evidenced through various government records produced by assessee that agricultural operations were carried on in that land when the transfer/sales took place. VAO also confirmed based on government records that there was standing crops of sugarcane, ground nut and paddy and ₹ 500/- was collected as land Revenue. VAO stated that there were three submersible pump sets for irrigating the lands. This contention of the assessee also stood accepted on the touchstone of preponderance of probabilities that the consideration received over and above the sale consideration of ₹ 1.91 crores mentioned in agreement to sale dated 07.01.2008 was towards standing crops. So far as whether the assessee is entitled for exemption on sale of aforesaid agricultural land within the provisions of Section 10(37) read with Section 2(14)(iii) we are of the considered view that this issue requires re-consideration by AO who shall adjudicate this issue afresh after making proper enquiries and verifications with local authorities and of the area where the said property was situated and such enquiries/verifications as the AO may consider necessary so as to arrive at conclusion whether said land is capital asset as defined u/s 2(14) exigible to tax or is entitled for exemption from tax u/s 10(37) We remit this issue back to the file of the AO for fresh determination after making necessary enquiries and verifications so as to determine whether or not the said land is eligible for exemption from capital gains under the provisions of the 1961 Act or is exigible to capital gains tax. The assessee is directed to produce all relevant evidences /material in support of its contention that capital gains earned from sale of said land are exempt from income-tax within four corners of provisions of the 1961 Act, which evidences/material shall be admitted by the AO in the interest of justice and thereafter adjudicated on merits in accordance with law. Needless to say that the AO shall give proper and adequate opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law in the denovo assessment proceedings. 2019 (10) TMI 1165 Expenditure on relocation of existing equipment - Nature of expenditure - revenue or capital expenditure - HELD THAT:- We observe that in proceedings before the CIT(A), the assessee had categorically submitted that the expenditure was incurred on replacement of perforated ceiling tiles in the laboratory. It is apparent from records that the expenditure was incurred on maintenance of the laboratory caused due to normal wear and tear. No new asset has come into existence, thus, we are of the considered view that the expenditure was in the nature of repairs and maintenance and not on capital account. The assessee has claimed expenditure on relocation of existing equipment to new Effluent Treatment Plant under the head repairs and maintenance . Revenue disallowed aforesaid expenditure on the premise that assessee would have got enduring benefit by relocation of the equipment and hence, the expenditure is capital in nature. We do not concur with the findings of the authorities below. It is not disputed by the Revenue that the equipment was already in existence. No new plant or machinery was purchased by the assessee. The relocation of the existing equipment by any stretch of imagination cannot result in creation of any new asset. At best it could have resulted in efficient running of the plant and machinery. Thus, the expenditure on relocation of existing equipment is revenue in nature. In the result, Ground No.II raised by the assessee is allowed. Treating the entire advance licence as taxable in the assessment under appeal - Year of assessment - HELD THAT:- Considering the decisions rendered in the cases of CIT vs Shoorji Vallabhdas Co. [ 1962 (3) TMI 6 - SUPREME COURT] , Morvi Industries Ltd. [ 1971 (10) TMI 5 - SUPREME COURT] and the provisions of section 28(iv) it is unambiguously clear that it is only to the extent that assessee has derived benefits from the licence during the impugned assessment year and the amount is chargeable to tax. Assessee has stated at the bar that in the subsequent assessment year assessee has offered to tax the amount to the extent benefit is derived under the licence. Hence, the Revenue is not deprived of tax on the benefit derived by assessee from advance licence. Thus, in view of the facts of the case and the decision of Hon'ble Apex Court, we find merit in the contentions of the assessee. 2019 (10) TMI 1164 Disallowance of dividend income u/s. 14A by invoking Rule 8D - computing Book Profits u/s 115JB - HELD THAT:- Upon perusal of financial statements as placed on record, it is also observed that the assessee has sufficient own funds in the shape of Share Capital Reserves amounting to ₹ 101.61 Crores as against investment of ₹ 12.85 Crores and therefore, unless it is shown that the investments were made out of borrowed funds and the nexus between the two was brought on record, a presumption was to be drawn in assessee s favour that own funds were used to make the investments. However, no such exercise emanates from quantum assessment order. Therefore, upon careful perusal of facts and circumstances, we find that matter of disallowance u/s 14A has not been properly addressed by lower authorities. Therefore deem it fit to remit the matter of disallowance u/s 14A while computing income under normal provisions as well as while computing Book Profits u/s 115JB to the file of AO for adjudication de-novo after considering the issue in correct perspective. AO is directed to appreciate the suo-moto disallowance offered by the assessee and if not satisfied, recompute the disallowance keeping in view the ratio of binding judicial pronouncements and principals laid down regarding the same. The adjustment of disallowance u/s 14A while computing Book Profits u/s 115JB, in terms of clause (f) to explanation-1 to Sec 115JB(2), would be attracted only in case it is established that the assessee has actually debited any expenditure in profit loss account relatable to earning of any exempt. Resultantly, the ground stand allowed for statistical purposes. Treatment of lease rental income - HELD THAT:- Matter may be restored back to the file of Ld. AO on same lines as done by the Tribunal in assessee s own case for AY 2011-12. Therefore, following the earlier view of Tribunal for AY 2011-12, this matter stand restored back to the file of Ld. AO for fresh adjudication on similar lines as directed by Tribunal vide paras 4 to 6 of the stated order. This ground also stand allowed for statistical purposes. Interest disallowance u/s 36(1)(iii) - HELD THAT:- For this the Ld. AR has relied upon the recent decision of Hon ble Supreme Court rendered in CIT V/s Reliance Industries Ltd. [ 2019 (1) TMI 757 - SUPREME COURT] for the submission that in case of mixed use of funds, a presumption was to be drawn that capital advances were out of free funds available with the assessee. CIT(A) has directed AO to recompute the disallowance based on number of days for which funds were actually utilized for capital advances. However, respectfully following the cited decision, we modify the directions by directing AO to ascertain the nexus of borrowed funds vis- -vis capital advances made by the assessee and until nexus is established between the two, a presumption would be drawn in assessee s favour that capital advances were out of free funds available with the assessee as per the cited decision of Hon ble Supreme Court as well as the decision of jurisdictional High Court rendered in CIT Vs. Reliance Utilities Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] . This ground also stand allowed for statistical purposes. 2019 (10) TMI 1163 Income accrued in India - receipt of income on account of gain on foreign exchange transaction - nature of income from capital gain as per article 14(6) of the India Spain treaty, and not taxable in India - PE in India - Whether assessee, being a foreign institutional investor, is refrained from undertaking any other business activity and accordingly the receipt on account of foreign exchange fluctuation will be in the nature of income from other sources or other income taxable in India or other income taxable in India as per article 23(3) of DTAA between India and Spain? - HELD THAT:- In view of our detailed analysis earlier and in our humble understanding, that fact, by itself, cannot make the gains taxable under article 7 when the assessee does not have a PE in India, or under article 14 when the gains are not covered by any of the exception clauses in article 14(1) to 14(5). It is not, in a way, even the case of the AO that these gains of the assessee are taxable in India under article 7 or article 14; his case is that these gains, admittedly outside the scope of article 7 and 14, are covered by article 23 as such. The question thus remains as to what is the scope of taxation in the source jurisdiction under article 23- an aspect which has not left intact by the judicial precedents relied upon and which, in fact, is the foundational issue raised in this appeal. Our decision is based on our analysis of these aspects, and our conclusion is that, under the Indo Spanish tax treaty, the assessee does not have any tax liability in respect of the transactions in question. We approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. Capital loss on sale of shares of companies engaged in real estate development activities classified under BSE Realty Index as exempt under Article 14(6) of the India-Spain DTAA - HELD THAT:- In the present case, while the assessee has sold no more than 2% shares in any of the six realty companies, namely Anant Raj Limited, DLF Limited, Indiabulls Real Estate Limited, Mahindra Lifespace Developers Ltd, Shobha Developers Ltd and Unitech Limited, as an investor. There is no question of holding any controlling interest or even significant interest in these companies. These holdings therefore cannot give, or be even part of an effort to get, controlling right or any other right to occupy the property. It has not even be the case of the Assessing Officer that the assessee had significant holdings in these companies. That apart, it is also important to note that all these companies are engaged in the business of real estate development rather than in the business of holding real estate as investments. The business model of realty companies is focussed on gains from real estate development rather than gains from holding the immovable properties. Viewed in the context of the purpose for which article 14(4) finds place in the Indo Spanish tax treaty, and unambiguous thrust of such provisions in the tax treaty literature, article 14(4) is to be read alongwith and to supplement article 14(1), the gains on sale of such shares cannot indeed be taxed in the source state under article 14(4). Secondly, while the expression principally is not specifically defined in the Indo Spanish tax treaty, as evident from the subsequent clarifications in the model convention commentaries, and in the absence of anything to suggest there was a different intention at an earlier point of time, the threshold test can be safely applied at fifty percent of total assets. What essentially follows that the sale of shares in only such companies are covered as hold, directly or indirectly, at least fifty percent of the aggregate assets consisting of immovable property. Just because a company is dealing in real estate development does not imply, or even suggest, that over fifty percent of its aggregate assets consist of immovable properties. It is not the case before us that predominant part, or fifty percent, of aggregate of assets of these companies consist of immovable properties. AO has made no efforts whatsoever to demonstrate, or even indicate, that the assets held by these companies constituted principally the immovable properties. AO has apparently proceeded on the presumption that just because these companies are dealing in real estate development, the assets of these companies principally consist of immovable properties. Such an approach cannot get any judicial approval. We approve the conclusions arrived at by the learned CIT(A) on this point as well and decline to interfere in the matter. On this issue also, our reasoning is different than the reasoning adopted by the coordinate bench, but then our conclusions are the same. 2019 (10) TMI 1162 Addition u/s 40A(2)(b) - related party transactions - services rendered towards transportation and handling of cargo - HELD THAT:- Transaction is being between the related parties, hence, section 40A(2)(b) squarely applies. In the assessment order, the AO has observed that insofar as payments made by the assessee towards related party on hourly basis and to other parties are either tonnage basis or trip basis, therefore, he disallowed 1/3 payments made by the assessee as excessive and accordingly added the disallowed amount of ₹ 81,37,032/- to the total income of the assessee, which was restricted to 15% by the ld. CIT(A) and directed the Assessing Officer to adopt ₹ 36,98,651/- as expenditure incurred by the assessee. We find that the AO ought to have been quantified what is the excess payment made by the assessee to the related party instead of simply making adhoc disallowance. Even ld. CIT(A) also simply restricted the disallowance to the extent of 15%. Under the above facts and circumstances of the case, we are of the opinion that it would be reasonable to restrict the addition to 10% from 15% made by the ld. CIT(A). Appeal filed by the assessee is partly allowed. 2019 (10) TMI 1161 Addition u/s 68 - unexplained cash credit - HELD THAT:- Admittedly the assessee has discharged his onus by furnishing the necessary details such as a copy of PAN, bank details, etc. in support of identity of the parties. There is also no dispute that all the transactions were carried out through the banking channel. Therefore, we are conscious of the fact that the assessee has discharged the onus regarding the identity of the parties. There is no doubt that the transaction of the loan was carried out through the banking channel. Therefore there cannot be any doubt about the genuineness of the transactions. The assessee in the present case has duly explained the source of money received in their hands. The assessee is not answerable to justify the source of the source of the money received by him. See ROHINI BUILDERS. [ 2001 (3) TMI 9 - GUJARAT HIGH COURT] - Decided in favour of assessee. 2019 (10) TMI 1160 Penalty u/s 271(1)(c) - non specification of charge - defective notice - HELD THAT:- We find the notice dated 16/03/2016 issued u/s. 274 r.w.s 271 of the Act, placed on record, does not specify the charge of offence committed by the assessee viz. whether had concealed the particulars of income or had furnished inaccurate particulars of income. Hence the said notice is to be held as defective. Customs 2019 (10) TMI 1159 Prohibited goods or not? - import of two models of feature phones, m280 and m380 , batteries, chargers (power adapters) and other mobile accessories - Confiscation on the grounds that the mobile phones imported have been manufactured by a manufacturer other than the one authorized by BIS; and the BIS registration will not apply to the mobile phones imported and the import of mobile phones is without valid BIS registration for their batteries - redemption fine - penalty. HELD THAT:- The goods have been confiscated by the Customs under Section 111(d) on the ground that the goods which are prohibited are attempted to be imported, perusal of Section 111(d) of the Customs Act 1962 shows that the said Section is applicable only if the goods which are imported or attempted to be imported or are brought within Indian Customs Water contrary to any prohibition imposed by this Act or any other law for the time being enforce whereas the Customs in the present case has failed to bring anything on record to show that the mobile phones are prohibited for import - Further, the main ground for confiscating the goods are that the address of the manufacture in the BIS Certificate and in the Bill of Entry are not matched. The manufacturing unit in Shenzhen, China has authorized all its customers to effect all banking transactions pertaining to the company to Hong Kong as part of usual business practice followed by all traders in India while importing articles from China. The finding of both the authorities that the names of both companies are different is not tenable in law and both the authorities have not properly examined all the documents produced before them. Further, the appellant has produced the documents pertaining to earlier import by them of the mobile phones and no such objection was raised earlier by the Customs authorities. The respondent has failed to appreciate the business practice followed by all Indian traders while importing articles from China and has unnecessarily detained the goods of the appellant company without any reason. The imposition of penalty on the appellant to the tune of ₹ 10,000/- is also unwarranted in law - Appeal allowed - decided in favor of appellant. 2019 (10) TMI 1158 Refund of Additional Duty of Customs leviable under sub-section 5 of Section 3 of the Customs Tariff Act - the duty was paid on imported goods which were subsequently sold in the domestic market on payment of sales tax/VAT - rejection on the ground of time bar, excess claim and non-production of records - HELD THAT:- Delhi High Court in the case of SONY INDIA PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS [2014 (4) TMI 870 - DELHI HIGH COURT] where it was held that In the absence of specific provision of Section 27 being made applicable in the said notification, the time-limit prescribed in this section would not be automatically applicable to refunds under the notification. Appeal dismissed - decided against Revenue. 2019 (10) TMI 1157 Whether redemption fine and penalty are subject to the doctrine of unjust enrichment? HELD THAT:- The Hon ble High Court in the matter of United Spirits Ltd. (supra) after considering the decisions of the Hon ble Supreme Court in the matters of Sahakari Khand Udyog Mandal [ 2005 (3) TMI 116 - SUPREME COURT ] as well as Mafatlal (supra) [ which were relied upon by the learned Commissioner while rejecting the Appeal of the Appellants ] held that the principle of unjust enrichment is not attracted in case of fine and the same was approved by the Hon ble Supreme Court in 2015 (5) TMI 371 - SUPREME COURT . In my view the learned Commissioner ought to have gone through both the decisions of Hon ble Supreme Court in order to see whether the said decisions are applicable on the facts of the case or in other words whether the same can be applied for rejecting the claim of refund of redemption fine and penalty on the ground of unjust enrichment. The principle of unjust enrichment is not applicable so far as the redemption fine or penalty is concerned - Appeal allowed. 2019 (10) TMI 1156 Refund of revenue deposit and duty deposited by them at the time of importation - rejection on the ground of unjust enrichment, non-production of original copies of bill of entry as well as TR-6 challans evidencing payment of duty. Unjust Enrichment - ground of rejection is based on the decision of the Tribunal in the case of MRPL [ 2011 (1) TMI 1155 - CESTAT, BANGALORE ] which has been reversed by the Karnataka High Court in the decision of MRPL [ 2015 (5) TMI 768 - KARNATAKA HIGH COURT ] - HELD THAT:- This issue is no more res integra and has been settled by various High Courts and Tribunal in various cases, one being COMMISSIONER OF CUSTOMS VERSUS HINDALCO INDUSTRIES LTD. [ 2008 (9) TMI 71 - GUJARAT HIGH COURT ] wherein it has been held that prior to the amendment dated 13.7.2006 in Section 18 of the Customs Act, 1962 principles of unjust enrichment is not applicable because the said principle has been incorporated only with effect from 13.7.2006 and has been held by the High Court to be prospective and not retrospective - thus, the principle of unjust enrichment is not applicable in the present case and denial of refund on this ground is not sustainable in law. Rejection on the ground of non-filing of the original document - HELD THAT:- Non-filing of the original document is also not a valid ground for rejection of the refund because the appellant has given justification for non-filing the original document and has also submitted that it is not required under law to file the original document in view of the decision in the case of SAMBHAV ENTERPRISES VERSUS COMMISSIONER OF CUSTOMS, COCHIN [ 2010 (9) TMI 513 - CESTAT, BANGALORE ]. Refund allowed - appeal allowed - decided in favor of appellant. 2019 (10) TMI 1155 EPCG scheme - import of machinery - undeclared spares - Benefit of N/N. 64/2008-Cus dated 9th May 2008 denied - non-declaration of goods on which duty had been paid along with the capital goods cleared earlier - appellant claims non-declaration due to ignorance of the shipment in the impugned consignment - HELD THAT:- The unutilised component of the transfer release advice of ₹ 9,88,063 has not been made available to the appellant in consequence of the findings in the impugned order that additional fee to cover excess imports effected against the discretionary enhancement, as laid down in paragraph 5.10 of Handbook of Procedures, has not been complied with. If that be so, the denial of the adjustment of duty saved against the impugned goods-declared and undeclared-would be tenable. However, the appellant has placed on record that the maximum fee mandated in the Policy has already been deposited; accordingly, the provisions in paragraph 5.10 of Handbook of Procedures is rendered inoperable. The appellant is entitled to adjustment of duty saved to the extent of the amount in the transfer release advice and the recovery of duty, if any, is to be restricted to any excess due thereafter. Thus, only the undeclared goods valued at ₹ 32,58,755 are liable to confiscation under section 111 of Customs Act, 1962 - redemption fine as well as penalty reduced - appeal allowed in part. Insolvency & Bankruptcy 2019 (10) TMI 1154 Maintainability of application - initiation of CIRP - Corporate Debtor - the principal stand taken is that the petitioner is not an Operational Creditor of Corporate Debtor - HELD THAT:- The Corporate Debtor has undertaken the assets and liabilities of erstwhile proprietorship firm-Royal Appliances and continued making payment to the Operational Creditor in lieu of the alloy ingots supplied by it to the proprietorship firm-Royal Appliances. There is no dispute raised or registered with Information Utility which may become the basis to reject the petition. The aforesaid entries have been made as extracted in the preceding paras in the books of account of the Corporate Debtor itself. The amount is due and payable - The claim made by the petitioner is within the period of limitation and must be regarded as an operational debt within the meaning of Section 5 (21) of the Code, 2016. This petition is admitted and Mr. Sandeep Jain is appointed as an Interim Resolution Professional - petition admitted - moratorium declared. Service Tax 2019 (10) TMI 1153 Refund of service tax - SEZ units - input services used for authorised operations - refund denied placing reliance in the Notification dated 01.03.2011 and 20.06.2012 - HELD THAT:- The issue decided in the case of JARDINE LLOYD THOMPSON INDIA PVT. LTD. VERSUS COMMISSIONER OF CGST, CE SERVICE TAX NAVI MUMBAI [ 2019 (10) TMI 816 - CESTAT MUMBAI] where it was held that denial of refund benefit on the ground of non-submission of Letter of Approval prior to the date of refund claim should not be considered as legal and proper - refund allowed - appeal allowed - decided in favor of appellant. 2019 (10) TMI 1152 Rebate claim - unjust enrichment - user of input services for export of goods - Service tax borne by the Respondent-assessee, on the rent paid by them to Mumbai International Airport Ltd. (MIAL) for its two outlets in the International Airport at the departure terminal - export of goods or not - eligibility of benefit under N/N. 41/2012-ST, dated 29.6.2012. Export or not - whether the sale of goods from these two outlets of the respondent to the passengers going abroad amount to Export ? - HELD THAT:- The respondent-assessee has procured duty/tax paid goods from domestic market and sold them at its departure terminal outlets located in the SHA to the international passengers going abroad. It is true that there was no option for the passengers going abroad but to take the goods out of India which were purchased by them from these two outlets of the respondent-assessee. Although according to the respondent these outlets are not the duty free shops, but had it been a duty free shop still the situation would not have been different - thus, the goods supplied are never cleared for home consumption and the warehoused goods are exported by the Duty Free Shop, therefore the levy Customs duty and of the IGST do not arise. The sale of goods at these outlets at the International departure terminals is an export of goods under Customs Act. The respondent can very well claimed to be an exporter under Section 2(20) of the Customs Act, 1962 since it is the respondent who is the seller and is selling the goods in the SHA at the International departure terminal to the international passengers going abroad. These goods are ultimately taken outside India by those passengers. In this way the passengers can be termed as carrier only and not the exporter of those goods. The exporter is the respondent. Therefore the issue of unjust enrichment will not arise here. The goods sold by the respondent-assessee at its outlets situated at the Security Hold Area at the departure terminal of Mumbai International Airport, are exports and the respondent is an exporter and the respondent-assessee is therefore eligible for rebate under N/N. 41/2012, dated 29.6.2012. Appeal dismissed - decided against Revenue. 2019 (10) TMI 1151 Construction of complex service - demand of service tax on residential complex constructed - HELD THAT:- The definition of the service liable to tax under the head of construction of complex service was amended by introduction of explanation to the clause (zzzh) of sub section (105) of Section 65 of the Finance Act - the cases where any amount is received by the builder from the prospective buyer of flats in installments in an agreement of sale became liable to tax only from the introduction of the above explanation w.e.f. 01.07.2010. The issue decided in the case of COMMR. OF C. EX., CHANDIGARH VERSUS GREEN VIEW LAND BUILDCON LTD. [ 2013 (6) TMI 315 - CESTAT NEW DELHI] where it was held that the explanation cannot be have retrospective effect and that in view of the various clarifications issued by C.B.E. C. during the relevant time no Service Tax liability can be imposed on the respondent for this type of activity. Demand do not sustain - appeal allowed - decided in favor of appellant. 2019 (10) TMI 1150 CENVAT credit - input services - intermediary services - tri-partite agreement - period April, 2014 to March 2015 during the period August 2015 to November 2015 - HELD THAT:- The appellant was having a tripartite agreement wherein the intermediary services provided to the appellant used to issue invoices to M/s Fastway and the appellant was taken cenvat credit thereof. Later on, the said trade practice was abolished and the intermediary broadcaster has issued direct invoices and the appellant took cenvat credit. In fact that services have been provided to the appellant by intermediary broadcasters who issued invoices to the appellant and the appellant paid the amount of services rendered by intermediaries to them directly not through M/s Fastway. As due to that reason the appellant had to file revised ST-3 returns and taken cenvat credit on the invoices issued by intermediary broadcasters, in that circumstances, the availment of cenvat credit of services are not in dispute and payment thereof, therefore, the cenvat credit cannot be denied. The adjudicating authority has mainly relied on the original returns. In fact, the appellant has filed revised returns, in that circumstances, the original return filed by the assessee are null void, the same cannot be considered any legal documents. Therefore, reliance placed by the Ld. Adjudicating Authority is misplaced - thus, the appellant has correctly availed the cenvat credit on the strength of revised ST-3 returns for the period ending Sept. 2014 and March 2015, therefore, no demand of service tax can be raised against the appellant. CENVAT Credit - credit also sought to be denied on the ground that the certificate does not have the name of the service provider - HELD THAT:- The service provider is M/s Surya Cables through its proprietor and availment of services and payment thereof is not in dispute, therefore, the cenvat credit cannot be denied to the appellant. Accordingly, the denial of Cenvat Credit of ₹ 23,54,179/- is set-aside. CENVAT credit - credit also sought to be denied on the ground that M/s North India Distribution is having these addresses in the invoices other than the address given in the registration certificate - HELD THAT:- The same cannot be the reason to deny cenvat credit when it is a fact on record the appellant has received the services and paid the service tax, therefore, the cenvat credit cannot be denied. Credit allowed - appeal allowed - decided in favor of appellant. 2019 (10) TMI 1149 CENVAT credit - period from 01/04/2008 to 30/04/2011 - demand confirmed alleging that the appellants are getting income from exempted services being accommodation income and restaurant income, both of which became taxable only w.e.f. 01/05/2011 and no reversal of CENVAT credit was made under Rule 6(3) of CCR - HELD THAT:- The appellant was not liable to pay service tax because the accommodation service and restaurant service became taxable only from 01/05/2011 and no CENVAT credit reversal was required under Rule 6(3) of the CCR - Further during this period, there was a dispute that whether the restaurant service and accommodation service are subject to tax or not and the Kerala High Court in the case of KERALA CLASSIFIED HOTELS AND RESORTS ASSOCIATION OTHS. VERSUS UNION OF INDIA OTHS. [ 2013 (7) TMI 431 - KERALA HIGH COURT] had held that both restaurant service and accommodation service cannot be subjected to service because they do not fall in the definition of exempted service and therefore the question of reversal of CENVAT credit does not arise - demand set aside. CENVAT Credit - period from 01/05/2011 to 30/06/2012 - abatement availed vide Notification No.1/2006-ST dt. 01/03/2006 - exempt services or not - Rule 6 of the CCR - HELD THAT:- The appellant availed abatement with respect to restaurant service and accommodation service as per Notification No.1/2006-ST dt. 01/03/2006. During the relevant time, availment of abatement vide Notification No.1/2006-ST dt. 01/03/2006 cannot be considered as exempted service for the purpose of reversal of CENVAT credit as per Rule 6 of CCR - demand set aside. CENVAT credit - period from 01/07/2012 to 31/03/2013 - appellants have availed the benefit of abatement with respect of accommodation service as per Sl.No.6 of the Notification No.26/2012 dt. 20/06/2012 - exempt services or not - HELD THAT:- For the demand for the period from 01/07/2012 to 31/03/2013, the definition of exempted service was again changed. The appellant during this time have availed the benefit of abatement with regard to accommodation service as per Sl.No.6 of the Notification No.26/2012 dt. 20/06/2012 which provides that 40% of the value of accommodation service has been exempted from the levy of service tax on the condition that credit on input and capital goods used for providing the taxable service have not been taken under the provisions of CCR. Further there was no restriction with respect to availment of CENVAT credit on input services as per the said notification and the only restriction was with respect to the availment of CENVAT credit on inputs and capital goods. The appellants are availing the benefit of abatement with respect to accommodation services under the Notification which cannot be considered as exempted services. Restaurant services - HELD THAT:- The appellants are not availing any abatement notification. Further as per Rule 2C of Service Tax (Determination of Value) Rules, 2006, value of service portion involved in supply of food or any other article of human consumption or any drink in a restaurant has been fixed as 40% of the total value on the condition that CENVAT credit on inputs classified under Chapters 1 to 22 of CETA, 1985 are not taken. Further we find that when the statute itself prescribes a percentage as total value as the value of service, the remaining portion of the value would neither be considered as an abatement nor as an exemption and accordingly the restaurant service would not be covered under the definition of input service and hence the provisions of Rule 6 of CCR are not applicable. Time limitation - demand for the period from April 2008 to March 2013 whereas SCN was issued for the period April 2008 to March 2012 - HELD THAT:- Extended period in the present case cannot be invoked because the law on the point was not clear and the definition of exempted service was changed from time to time and the interpretational issue was involved - Therefore, the substantial demand for the period from April 2008 to March 2012 amounting to ₹ 69,76,592/- is entirely time barred. Thus, the appellants are not required to comply with the provisions of Rule 6 of the CENVAT Credit Rules, 2004 - appeal allowed - decided in favor of appellant. 2019 (10) TMI 1148 Refund of service tax remaining unutilized - rejection of refund only on the ground that the appellant has not availed cenvat credit amounting to ₹ 35,41,988/- in their ST-3 returns - can the non-disclosure or delay in disclosure in ST-3 returns, the assessee looses his right to claim cenvat credit or not? - HELD THAT:- After going through the various conditions set out in the appendix to the N/N. 5/2006 issued under Rule 5 of Cenvat Credit Rules, 2004 and Rule 4 and Rule 9 of Cenvat Credit Rules, the appellant has filed all the necessary documents for claiming the cenvat credit viz. invoices, books of accounts, cenvat credit register which are required as per the various Rules and the Notification to claim cenvat credit but inadvertently he has failed to disclose the same in the ST-3 return which is only a procedural infraction. Under the Notification as well as under the Rule, it has not been categorically provided that non-disclosure of cenvat credit in the ST-3 return will disentitle the assessee from claiming the cenvat credit if he is otherwise entitled to. Further, the cenvat credit is a beneficial legislation and it should be construed liberally so as to upheld the letter and spirit of such beneficial piece of legislation and a narrow interpretation would read down the benefit given by the legislature and defeat the very purpose of enacting of such beneficial legislation. Therefore, the denial of the refund only on the basis of non-disclosure of the cenvat credit in ST-3 return is not legally sustainable and therefore, the rejection of refund on this ground is set aside. The Commissioner (Appeals) in the impugned order has observed that the appellants have not submitted any documents to prove their contention that they have rightly availed the cenvat credit. It appears that both the authorities have not examined all the documents which have been filed by the appellant in support of their refund claim - Matter requires re-examination - appeal allowed by way of remand. 2019 (10) TMI 1147 Refund of CENVAT Credit - input services - Rule 5 of Cenvat Credit Rules, 2004 - refund denied on the ground that the services for which refund has been filed are not input services in terms of Rule 2(l) of Cenvat Credit Rules, 2004 - HELD THAT:- It was not disputed that at the time of availment of credit on the services in question, therefore, at the time of filing refund claim, it cannot be disputed the credit lying unutilized are not input services in terms of Rule 2 (l) of Cenvat Credit Rules, 2004 in the light of the decision of this Tribunal in the case of VERISIGN SERVICES INDIA PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX BANGALORE SERVICE TAX- I [ 2018 (2) TMI 927 - CESTAT, BANGALORE ]. The refund claim cannot be denied merely on the premise that services in question on which Cenvat credit remained unutilized in Cenvat credit are not Input Services - appeal allowed - decided in favor of appellant. Central Excise 2019 (10) TMI 1146 Permission for withdrawal of appeal - monetary amount involved in the appeal - CENVAT Credit - electricity so generated and cleared/sold to the grid outside the factory can be treated as captively used for the manufacture of final products - Cenvat Credit availed on inputs used in the power so generated inadmissible - HELD THAT:- The appellant admits that in view of instructions dated 22.8.2019 issued by Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs (Judicial Cell) the instant appeal would not be maintainable before this Court, as amount of revenue involved i.e. ₹ 12, 168/- is below the monetary limit of ₹ 1 Crore. In view of the said instructions dated 22.8.2019 learned counsel for the appellant prays for withdrawal of the instant appeal, however the question of law raised would remain open - appeal dismissed as withdrawn. 2019 (10) TMI 1145 Maintainability of appeal - Appropriate forum - valuation of excisable goods - Section 35G and 35L (1)(b) of the Central Excise Act, 1944 - HELD THAT:- As undisputedly the issues raised in the present appeal have relation with the valuation of goods for the purpose of assessment of duty, in our view the appeals filed in this Court will not be maintainable. The present appeal is disposed of with liberty to the appellant to file an appeal under Section 35L of the Central Excise Act, 1944 before Hon'ble the Supreme Court. 2019 (10) TMI 1144 CENVAT Credit - input services - Courier Service used by the appellant for goods transportation up to the customer s place - place of removal - Rule 3 of CCR, 2004 - HELD THAT:- The removal up to the customer s premises is covered by the decision in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. [ 2018 (2) TMI 117 - SUPREME COURT] , to which the appellant is not entitled to any CENVAT Credit. With regard to the other destinations, the narration of destination is only Manufacturer and Depot , which appears to be vague. Hence, the Adjudicating Authority has to verify the actual destination i.e., he shall verify the actual destination and if it is not again a customer s place, then allow the credit as per law - the issue is remanded to the file of the Adjudicating Authority. The appeal is partly remanded and partly dismissed. 2019 (10) TMI 1143 Clandestine removal - non-accountal of excess goods found - cross-examination not carried out - HELD THAT:- Admittedly the goods were lying in the factory and subsequently recorded in the RG-1 register. Therefore, for any goods lying in factory, duty demand does not arise. Non-accounting and consequent confiscation of excess stock found during visit of the officers - HELD THAT:- Both, Shri Santosh Shrivastav, Production Manager and Shri Rajiv Thadani, Director of appellant Company in their respective statements recorded under Section 14, stated that non-accountal of excess found goods is due to technical snag in the computer software and for this reason, production record could not be generated for the period 01 January 2014 to 06 January 2014 and because of this reason, RG-1 register could not be updated. Admittedly, there is no investigation by the Revenue on these categorical statements given by the appellant s employees and no evidence has been brought on record that non-accounting of finished goods is with intention to clear the goods clandestinely for evasion of duty. There is no evidence of attempt to clear the goods clandestinely but there is contravention of the provisions inasmuch as the appellant have not recorded the excisable goods in the statutory record - Duty demand is set-aside. However, the duty liability arise as and when the goods are cleared from the factory. Confiscation of goods and consequent redemption fine are also set-aside - Penalty imposed under Rule 25 of Central Excise Rules, 2002 is reduced - penalty imposed on Shri Rajiv Thadani is set-aside - Appeal allowed in part. 2019 (10) TMI 1142 Area Baswed exemption - substantial expansion by increasing installed capacity by more than 25% - benefit of N/N. 50/03-CE dt.10.6.2003 - It appeared to Revenue that out of 19 computers, 15 computers were used for such activity which was not covered by the provisions of Central Excise Act and only for 4 computers were installed for replication of data on CDs which was the activity covered by Central Excise Act,1944 - Substantial expansion took place or not - HELD THAT:- For the earlier period in their own case M/S. NIIT GIS LIMITED, SHRI TARUN CHATTERJEE VERSUS CCE, CHANDIGARH [ 2018 (10) TMI 1544 - CESTAT CHANDIGARH] , this Tribunal has dropped the demand against the assessee-respondent holding that the respondent is entitled to avail the benefit of Notification No.50/03-CE dt.10.6.2003 - Benefit allowed - appeal dismissed - decided against Revenue. 2019 (10) TMI 1141 Area based exemption - benefit of N/N. 50 of 2003 - Job-work - process amounting to manufacture - the benefit of the job work was not extended to the appellant on the ground that principal manufacturer was exempted in terms of the area based exemption notification and was not paying any duty of excise - HELD THAT:- There was a finding in favor of the assessee by the Original Adjudicating Authority as regards admissibility of cenvat credit which finding was not challenged by the Revenue, even though the Assistant Commissioner did not extended the benefit and did not calculated the value of demand by neutralizing the same against the cenvat credit. In such a scenario it was not justifiable on the part of Commissioner (Appeals) to deny the cenvat credit to the assessee on the ground of invoices being more than 6(six) months old - the demand now being confirmed against the assessee is required to be neutralized against the cenvat credit available to them for which they will produce documentary evidence. Time limitation - HELD THAT:- Inasmuch as appellants were paying service tax on the same activity and were filing ST-3 Returns there was due knowledge on the part of the Revenue and no mala fide can be attributed to the appellant so as to invoke the longer period. Penalty - HELD THAT:- Inasmuch as we have held absence of any mala fide on the part of the appellant, the penalty imposed upon them is set aside in toto. The matter remanded to Original Adjudicating Authority to re-quantify the duty falling within the normal period of limitation and after extending the benefit of cenvat credit of duty paid on the inputs, as also by taking into account the service tax paid by the appellant in respect of the same activities during the relevant normal period. Appeal allowed by way of remand.
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